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3 Mar 2014
Flash: USD/CAD tipped for upside - TD Securities
FXStreet (Guatemala) - Shaun Osbourne, Chief FX Strategist at TD Securities explained "With two key Canadian data reports in the past week or so, CPI and GDP, providing positive surprises, expectations that the BoC’s policy message could shift even more towards the dovish at Wednesday’s FAD have eased and the CAD has found a little more obvious support emerging on weakness versus the USD as a result".
Key Quotes
"We don’t think the all clear can be sounded on the economy just yet (the pick up in inflation seen in January may reverse somewhat in February, for example)."
"The broader rally in USD/CAD seen over the past few weeks has been stifled but the lack of volatility elsewhere may also be a contributing factor to the generally range-bound feel of the market at the moment. USD/CAD has stopped rallying but it does not feel—to us—like the USD is going to ease significantly from here for the moment."
"Indeed, USD/CAD found steady buying interest through the European morning session to gain from the low 1.10 area all the way back to near 1.11. The 40-day MA in funds at 1.1026 today remains an important technical support zone for USD/CAD."
"While this week’s North American events and data releases are important, near-term focus on risk aversion is likely to see the commodity currencies under-perform—the CAD, AUD and NZD retain the strongest positive, correlation with stocks in the G-10 block—while the JPY and (to a lesser extent), the CHF may out-perform. IF USD/CAD remains rangey, we may see relatively more movement on the crosses near-term (CAD/JPY possibly extending losses below recent lows at 90.80)."
Key Quotes
"We don’t think the all clear can be sounded on the economy just yet (the pick up in inflation seen in January may reverse somewhat in February, for example)."
"The broader rally in USD/CAD seen over the past few weeks has been stifled but the lack of volatility elsewhere may also be a contributing factor to the generally range-bound feel of the market at the moment. USD/CAD has stopped rallying but it does not feel—to us—like the USD is going to ease significantly from here for the moment."
"Indeed, USD/CAD found steady buying interest through the European morning session to gain from the low 1.10 area all the way back to near 1.11. The 40-day MA in funds at 1.1026 today remains an important technical support zone for USD/CAD."
"While this week’s North American events and data releases are important, near-term focus on risk aversion is likely to see the commodity currencies under-perform—the CAD, AUD and NZD retain the strongest positive, correlation with stocks in the G-10 block—while the JPY and (to a lesser extent), the CHF may out-perform. IF USD/CAD remains rangey, we may see relatively more movement on the crosses near-term (CAD/JPY possibly extending losses below recent lows at 90.80)."